18 September 2009

An article on ComputerWorld bring talks about a new broadband pricing approach that could help hold down broadband prices toattract more users in rural or low-income areas.

The economists Robert Shapiro and Kevin Hassett released a study through the Georgetown Center for Business and Public Policy that provided new suggestions for how ISPs can charge more to high bandwidth consumers and mitigate the potential of higher prices for the majority of their customers. Network World senior writer Brad Reed talked with Shapiro about what the plan entails and how it could help hold down broadband prices to attract more users in rural or low-income areas.

One of the chief challenges for ISPs has been how to fund network build-outs to increase broadband speed and capacity without passing too much of the cost onto customers. The problem as many ISPs see it is that the demand for greater bandwidth comes from a relatively small number of users that consume bandwidth at a much higher rate than the typical consumer.

Thus, argue the ISPs, the current pricing models that charge flat rates for users regardless of the bandwidth they consume are simply unsustainable. Some ISPs have tried to charge more money to high bandwidth users by placing caps on the amount of bandwidth each consumer can use per month, but these schemes have so far proven unpopular with customers.